Toshiba cuts 2007 profit forecast over HD DVD exit

Kyodo News

Toshiba Corp. said Wednesday it has cut its projection for group net profit for the business year ending March 31 to ¥125 billion from the previously projected ¥180 billion mainly because of its withdrawal from the HD DVD business.

Toshiba said it will likely incur a special loss of ¥45 billion in business 2007 over the format defeat. The firm also said its total loss linked to HD DVD from business 2005 when it started full-scale operations to the current year are estimated to reach ¥160 billion.

The electronics giant now expects a group operating profit of ¥230 billion on sales of ¥7.7 trillion for business 2007, revised down from ¥290 billion in operating profit on sales of ¥7.8 trillion in previous estimates released Oct. 29.

It also lowered its consolidated pretax profit estimate to ¥250 billion from ¥350 billion.

With the extraordinary loss for the current year, Executive Vice President Fumio Muraoka said Toshiba intends to avoid further losses linked to the pullout.

Toshiba announced Feb. 19 that it will stop producing and developing HD DVD equipment and terminate sales close to the end of this month.

Toshiba’s HD DVD exit paved the way for the Blu-ray format, backed by electronics makers led by Sony Corp., to win the battle for the next-generation DVD format.